LONDON — Theresa May has a problem: Half of Britain still doesnt believe her government on Brexit.
The U.K. chancellor called time on austerity Monday with the biggest giveaway budget since the 2008 financial crash, splurging £100 billion more over the next six years than previously planned — and with almost all of it going on the National Health Service.
With an eye to the upcoming vote on the Brexit divorce deal with Brussels, Philip Hammond also held out the prospect of even more spending to come if the country secures an orderly exit from the EU, promising MPs a “double deal dividend” for the economy and public spending if they back a deal and avoid crashing out of the European Union in March 2019.
The twin-pronged message — of an end to austerity and an extra Brexit deal bonus for voters — in the governments last annual budget before the U.K. quits the bloc comes at a time of maximum danger for May. As well as seeking a deal with Brussels that is acceptable both in the U.K. parliament and to the country more widely, the prime minister must also neutralize the threat from Jeremy Corbyns Labour Party, which continues to sit within touching distance of the government in most polls.
However, according to an exclusive snap poll carried out for POLITICO by Hanbury Strategy, the government only successfully landed one of these two core budget messages. While there is overwhelming public support for the governments decision to end the public spending squeeze, which has been in place since 2010, the poll showed continued skepticism about warnings of the risks of a no-deal Brexit.
In an apparent vindication of Mays decision to draw a line under the post-crash era of austerity, 57 percent said the government should spend more money rather than balance the books, with just 12 percent saying the priority should be getting back into the black. By almost four to one — 57 percent to 14 percent — voters also support the governments decision to spend almost all the extra cash from an unexpected boost in tax receipts on health care rather than other public services.
However, according to the poll of 500 adults carried out between 6.30 p.m. and 9 p.m. on Monday, the public is still split on the chancellors warning that a failure to reach a Brexit agreement with Brussels could jeopardize future spending increases on public services.
Nothing has changed
The POLITICO/Hanbury poll shows the country remains as divided as ever over Brexit, with 52 percent either not buying the warning that leaving the EU without a deal would negatively impact spending on public services or saying reduced public spending would be a price worth paying.
In an echo of the 2016 EU referendum, 48 percent say they agree with the government that no deal will mean less money for public services and this is not a price worth paying.
The findings are a blow to the chancellor, who told MPs that securing a Brexit deal with the EU would deliver a “double deal dividend” to the U.K. economy.
With the chances of no-deal rising, Hammond has kept aside £15 billion of “firepower” to spend in case the U.K. crashes out of the EU. In the event that May can broker a deal with Brussels, Treasury officials said this money would be freed up to be spent on public services.
“Were at a pivotal moment in our EU negotiations and the stakes could not be higher,” Hammond said. “Get it right and we will not only protect Britains jobs, businesses and prosperity but we will also harvest a double deal dividend: a boost from the end of uncertainty and a boost from releasing some of the fiscal headroom that I am holding in reserve at the moment.”
Conservative Brexiteer MPs concerned that the prime ministers Brexit plan will bind the U.K. too closely to EU rules will likely jump on the findings to argue that the fallout from a no deal can be contained.
Buying time
The immediate effect of Mondays budget, however, is that it has bought the prime minister more time.
There had been reports that Northern Irelands Democratic Unionists, who prop up Mays government in Westminster, were willing to vote down the budget if the prime minister agreed Brexit withdrawal terms with the EU that created an economic border between Great Britain and Northern Ireland. This threat evaporated.
Hammond singled out Northern Ireland for investment, with £350 million set aside for the Belfast region, among other measures. The partys Westminster leader, Nigel Dodds, tweeted that the DUPs confidence and supply agreement with the government was “delivering again.”
One minister said the giveaway budget revealed just how precarious the governments position now was.
“It just shows where we are,” he said. “This was all about soft-soaping the parliamentary party and the DUP. The truth is now, we are only able to get something through parliament now if we throw cash at it.
“The whole budget was designed to avoid a parliamentary vote which we might lose. It means you cant raise taxes or cut spending. It highlights the weakness of the government. We could have said, OK, lets raise taxes for some of the spending, but no. Nothing that involves a tax rise or a spending cut is possible. This is the new reality — all the power is with parliament.”
Another senior Tory MP said Hammond had been left with little choice but to turn on the spending taps, insisting he needed to “fight the austerity label” that was killing the Tories. “Have you seen the Labour ads?” he said.
A third senior Tory — another minister — said it was a “one-nation budget at a time of uncertainty” but admitted it did not leave much room to absorb an economic downturn. “This is why as smooth a Brexit as possible is what we need.”
In analysis released alongside Mondays budget, the governments independent economic forecaster, the Office for Budget Responsibility, warned a “disorderly [Brexit] could have severe short-term implications for the economy.” However, it said: “The scale would be very hard to predict, given the lack of precedent,” the OBRs accompanying forecast document said.
The OBR called a no-deal Brexit “the most immediate and significant” downside risk currently affecting the British economy.
While the public remains skeptical of continued warnings about the economic cost of a disorderly Brexit, there was widespread support for the tax and spending measures in the budget.
The proposed new “Google tax” on giant U.S. tech companies is extremely popular with the country, according to the POLITICO/Hanbury Strategy poll, with over nine in 10 supporting it. One third of those polled said it does not go far enough.
Overall, the majority of the country — 56 percent — said Mondays budget will be neither good nor bad for their family. However, in a boost for the government, the number of people who think it will be good is almost three times as many as those who think it will be bad — 33 percent to 11 percent.
Hanbury Strategy — a member of the British Polling Council — polls people on their smartphones by advertising on up to 60,000 apps and targeting different types of handsets.
